Market participants to have more choice in clearing.
EuroCCP, the largest cash equities central counterparty in Europe, announced today that it will be clearing trades executed on London Stock Exchange.
LONDON and AMSTERDAM, 20 May 2014 – European Central Counterparty N.V. (EuroCCP), the largest cash equities central counterparty in Europe, announced today that it will be clearing trades executed on London Stock Exchange (LSE).
Firms using EuroCCP to clear UK equities trades executed on Aquis, BATS Chi-X, Equiduct, GETMatched, Sigma-X, SmartPool, Turquoise and UBS MTF will be able to direct LSE trades to EuroCCP and save at least 50% on settlement costs. Through cross-platform netting by EuroCCP, all trades in the same UK stock, regardless of where they are executed, can be netted with LSE trades into one single settlement obligation.
In April EuroCCP became the first authorised CCP for equities under the European Market Infrastructure Regulation (EMIR). EuroCCP’s risk management framework, operating model and technology meet the safety standards required by EMIR.
Diana Chan, CEO of EuroCCP, said, “Many market participants have been waiting to have more choice in where they clear trades executed on London Stock Exchange. The addition of EuroCCP to the central counterparties already available will bring the benefits of more competition together with reduced costs.”
EuroCCP will start clearing LSE trades after legal, connectivity and operational arrangements have been finalized among the relevant parties and regulatory approvals have been received. Interoperability arrangements are already in place between EuroCCP and the incumbent clearers for LSE, LCH.Clearnet Ltd. and SIX x-clear AG.
Cross-platform netting of UK equities by CCPs has been possible since 2013 for trades executed on multilateral trading facilities and it is expected that LSE trades can also be cross-platform netted starting in Q3 2014.
European Central Counterparty N.V. (EuroCCP) clears equities traded on stock exchanges, multilateral trading facilities and other securities trading platforms. After a trade has been executed, EuroCCP centrally manages counterparty risk for trading firms and reduces their post-trade costs through netting. EuroCCP clears for 14 trading platforms; it clears equities, ETFs and depositary receipts listed in 18 national markets including the United States.
Headquartered in Amsterdam, EuroCCP was formed in December 2013 following the combination of Dutch-based European Multilateral Clearing Facility N.V. and UK-based European Central Counterparty Limited. The company is equally owned by the stock exchanges BATS Chi-x Europe and NASDAQ OMX, by ABN AMRO Clearing Bank and by The Depository Trust & Clearing Corporation (DTCC).